Vistra Corp. (NYSE:VST) Released Earnings Last Week And Analysts Lifted Their Price Target To US$87.71

Shareholders of Vistra Corp. (NYSE:VST) will be pleased this week, given that the stock price is up 15% to US$93.42 following its latest first-quarter results. Overall the results were a little better than the analysts were expecting, with revenues beating forecasts by 4.5%to hit US$3.1b. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Vistra

Taking into account the latest results, the most recent consensus for Vistra from eight analysts is for revenues of US$15.4b in 2024. If met, it would imply a decent 15% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to surge 215% to US$5.43. Before this earnings report, the analysts had been forecasting revenues of US$15.9b and earnings per share (EPS) of US$4.66 in 2024. Although the analysts have lowered their revenue forecasts, they've also made a solid gain to their earnings per share estimates, which implies there's been something of an uptick in sentiment following the latest results.

The average price target rose 24% to US$87.71, with the analysts signalling that the improved earnings outlook is the key driver of value for shareholders - enough to offset the reduction in revenue estimates. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Vistra at US$133 per share, while the most bearish prices it at US$32.00. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's clear from the latest estimates that Vistra's rate of growth is expected to accelerate meaningfully, with the forecast 21% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 6.3% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 5.6% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Vistra to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Vistra's earnings potential next year. They also downgraded Vistra's revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. Even so, earnings are more important to the intrinsic value of the business. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Vistra analysts - going out to 2026, and you can see them free on our platform here.

Before you take the next step you should know about the 1 warning sign for Vistra that we have uncovered.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.